Earnings could give Nasdaq boost it needs to retake bubble-era highs

By Shawn Langlois

Reuters

New highs in the stock market used to mean something. Or, at least, they used to feel like something. But the ones we’ve nailed lately tend to come and go with halfhearted headlines and a numb confidence that another awaits. And it always does.

The first new high in some 14 years could surface on the Nasdaq sooner rather than later, if Wall Street’s rosy earnings outlook comes to fruition.

The last thing bears need is another market tailwind, but that’s what they might be getting from corporate results over the next few quarters. Analysts polled by Reuters are looking for double-digit growth in both the third and fourth quarters. This hasn’t happened since 2011. But first things first: This quarter.

And it essentially begins this week with Alcoa.

Dennis Gartman took to CNBC over the weekend to pound the table (more like a slight tap) on the aluminum maker, but he also threw some cold water on the consensus notion of this upcoming stretch of blockbuster earnings.

“You’re not going to get double-digit earnings,” he said. “You’re going to get solid earnings. You’re going to get pleasant earnings. You’re going to get nice earnings.” But check those expectations at the door, right next to the leftover fireworks.

The quote of the day:“If you are at a religious cult event and offered some Kool Aid. If you are a part of a stampeding herd toward a cliff. After having a few beers at the ballgame, your work group decides to streak across the field. Even without hindsight, in these situations it makes sense to go against the crowd. But what about in the stock market?” Greg Harmon, from the Dragonfly Capital blog, on when it pays to be a contrarian and, in the stock market’s case, when it doesn’t.

The Google guys open up about the benefits of part-time work, driverless cars and lots of other stuff. Here’s the transcript and the full video:

The chart of the day: The Nasdaq
/quotes/zigman/12633936/realtimeCOMP is a mere 12.5% from regaining its high. It’s been a long journey back, but the unthinkable may soon be upon us. This chart is a simple one, but it still tells an amazing story. The Nasdaq peaked at 5,132 in 2000, before plunging 79% over the next two years or so. For most watching, it had to seem like the level would never be revisited. At least in this lifetime. Since then, as Bespoke shows, the Nasdaq has surged more than 300%, despite a 55% hiccup during the financial crisis. “Just since its lows this April, the Nasdaq is up 13.7%, so another rally like we’ve had over the last 2+ months, and we’ll be at new highs,” the Bespoke blogger wrote. “Pretty remarkable, but also kind of scary.”

The call of the day: Steen Jakobsen, chief economist at Saxo Bank, sticks by his call that the second half of the year will bring a 30% drop on the S&P. “This is not ‘different times’, the system’s low volatility will be replaced by higher volatility, the zero bound leads to bubbles by definition, unless you of course believe in eternity, and most importantly, mean-reversion and compounding remain the two most powerful tools in finance.” But the biggest surprise in Europe, he says, will come from Germany, where zero growth will hit by the first quarter of 2015. His call: Long Nikkei
/quotes/zigman/5986735/delayedJP:NIK, Israel, Russia, Korea and short the DAX
/quotes/zigman/2380246/delayedDX:DAX and S&P.

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